Contents
Thai banks poised to capture the upturn ...................................................................... 3
The banking sector stands to benefit from an economic recovery in 2010 as we project loan growth to
rebound to 8.9% from sluggish growth of 1.7% in 2009. With massive excess liquidity, solid capital
bases and less wholesale funding reliance, Thai banks are poised to capture the upturn. Foreign
banks’ loss of lending focus is also positive for Thai banks in the loan and fee income areas.
Easing NPL risk; credit costs to peak in 2009 ............................................................... 7
With Thai banks’ prudent moves to tighten risk management since mid-2008, NPLs for most are under
control. Within a regional context, Thai banks posted the smallest increases in NPLs in 1Q09. We
expect NPL risk to be less of an issue going into 2H09 and credit costs to peak this year given our
expectation of the economy reaching its bottom in 2Q09.
Bullish earnings outlook allows sector re-rating........................................................... 10
We upgrade our stance on the sector to POSITIVE as we look ahead to a 2010 recovery. We now
project overall earnings for Thai banks to grow 12% in 2010, after an 8% decline in 2009. SCB is the
best recovery theme play while KTB is a clear beneficiary of government spending. BBL is our pick for
a cheap, laggard play with sound fundamentals.
Earnings estimates and valuation ratios and P/BV band chart.................................... 17
Financial statements – P&L, Balance sheet and Cash flow ........................................ 20
Bank of Ayudhya – REDUCE; CP: THB14.90; TP: THB9.40 (from THB8.00) ..............................20
Bangkok Bank – BUY; CP: THB102.00; TP: THB110.00 ..............................................................22
Kasikornbank – BUY; CP: THB68.75; TP: THB77.00 (from THB68.00) .......................................24
Krung Thai Bank – BUY; CP: THB 8.25; TP: THB8.60 .................................................................26
Siam Commercial Bank – BUY; CP: THB77.75; TP: THB90.00 (from THB75.00) .......................28
Siam City Bank – BUY; CP: THB14.70; TP: THB9.00 ..................................................................30
Tisco Financial Group Pcl – BUY; CP: THB19.10; TP: THB17.00 ................................................32
TMB Bank – HOLD; CP: THB0.93; TP: THB0.80 (from THB0.63) ................................................34